Ann: Black Swan Underground Drilling Success, page-10

[Reply to Red. For some reason HC's flaky UI isn't giving me proper Reply functionality today...]

Just to clarify, my earlier comment only related to LOM.

Hopefully the updated FS will be announced later this month - just in time for the AGM. If not, they should be in a position to release it before Christmas.

As far as the FID on restart goes: I was hoping for that to occur at the same time, but I guess it all depends on what, if anything, the updated FS brings in terms of cost improvements and how all that plays into the recently softened NP. As I type this reply, spot Ni is currently AU$10.25/lb - only marginally above the July, 2018 DFS revenue target of AU$10.13/lb. I know we need to row our own boat, but (for the benefit of others who might be reading this) PAN only committed to their (now problematic) restart when spot was ~20% above their Base Case FS revenue targets, which helped from making a bad operational situation much, much worse when spot deteriorated soon after their restart decision. They had/have a different set of dynamics than we will face and I'm not suggesting we need to wait until spot is also precisely 20% above our revenue targets. However, the PAN experience, which I'm sure our Board has been monitoring, is a salient reminder that having some additional fat is not in any way a bad idea -- assuming, of course, the motive is to maximize profits.

Notwithstanding the language in today's announcement that the FID is still on track for sometime this quarter, I wouldn't be at all surprised to see it pushed into next quarter, based on (AUD) spot's current behaviour. That is, unless the updated FS (hopefully) provides us with more wiggle room. As alluded to, above, the key will be just how improved the updated FS ends up being and how it relates to current spot. The current Board has shown it's capacity for stone cold sober commercial risk-taking and I don't think they're about to change those spots anytime soon.

I disagree the BS complex being all about tolling other people's ore once restarted. The primary business case revolves around being able to profitably mine and process our own ore at BS - albeit initially* using only ~50% of processing capacity. The revenue generated from third-party processing using the (underutilized) remaining 50% won't act as a profit centre per se, but will act to reduce the overall COP (i.e. still financially beneficial - just not the core business case driver). The tolling equation is secondary. That's why it wasn't included in the original DFS, imo.

Z

(*I say "initially" because if the idea of trucking ore from Windarra to BS has legs, then we'll need all of our processing capacity at BS in due course.)